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Eight Tips for Parents Who Have Saved Nothing for College

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Eight Tips for Parents Who Have Saved Nothing for College

By Ron Lieber May 1, 2014 10:16 amMay 1, 2014 10:16 am

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Just because you haven't saved the $65,260 it might cost to attend the Berklee College of Music doesn't make you a bad parent.Credit

A couple of days ago, a post here by a mother in Maine lamenting her lack of savings for her son’s college education inspired an outpouring of comments. A number of people questioned her and her husband’s decision to raise six children. Others thought she might have been better off putting money aside years ago instead of paying for music lessons and sports.

The essay struck a different nerve for me. I’m the personal finance columnist for this newspaper, and I have spent years thinking about how we can do a better job talking about money with our children.

So I wondered two things: What are parents supposed to do once their kids are ready for college if they haven’t saved a cent for the costs? And what are they supposed to say to their children about why they haven’t and what will need to happen next?

Given the rising cost of college and the uneven economic recovery, there will be a lot more families facing this sort of thing in the coming years. Here are eight things to consider:

NO SECRETS By pouring out her soul here on the Motherlode, it seems as if Meadow Rue Merrill, the mother in question, doesn’t hide much from her children. This is good. Kids should know where they stand.

So how much have you saved? How much can you spend? How much are you willing to borrow? And how soon can you sit down and explain it to your high school sophomore or junior? If you don’t know the answers, that’s fine. Just say so and explain what the variables are that might affect the outcome.

These aren’t always easy discussions. But keep in mind that when you fill out the the FAFSA (the application for federal financial aid), your child will need to sign it, and it will include your income and other information. So you’ll need to reveal all sooner or later.

NO APOLOGIES So you haven’t saved anything yet. Maybe you have some regrets. Chances are, however, you’ve put a lot of your discretionary money into a nicer place for your family to live, enrichment activities for your kids and family experiences that will create lifelong memories.

These are good things. Your children probably do not resent you for them. You certainly don’t owe them an apology, given that you don’t yet know where they’re going to college and what the outcome will be.

BARN-RAISING Many high schools do not or cannot do a great job giving students advice on picking the right college. Fewer still know a lot about the finer points of financial aid. So you’ll want to turn to your community for advice. Who has been through this recently? What did they learn?

This too may be a bit uncomfortable, but it can get easier to disclose financial particulars to others when your children’s future is at stake.

LOTS OF SCHOOLS Reading between the lines, Ms. Merrill’s son in Maine sounds like a gem. Maybe he’s a good enough guitar player to attend the Berklee School of Music, a few hours down Interstate 95. There may be a private college out there that’s willing to give him so many grants that the overall cost will fall below what the state university would charge him, even if it’s not Berklee.

There’s only one way to know for sure, though, and that’s to apply to as many schools as possible. Include at least a few where a child would be well above average; the schools might be willing to discount generously to attract a handful of special first-year students. Yes, there are application fees for each one, though you can ask for a waiver if money is particularly tight.

GAP YEAR There is no rule saying that every 18-year-old has to go straight from high school to college. Military service comes with many financial benefits. Other high school graduates live at home for a year and work as many hours as they can to save money for college. Even if they only bank $10,000 in 12 months, that money represents loans they won’t have to take out later.

Meanwhile, older students tend to get better grades than 18-year-olds sprung loose from home for the first time. A year of experience may also help with other jobs later.

COMMUNITY COLLEGE Few employers and graduate schools care where you started. So if there is a good community college nearby, living at home and starting college there may be a good idea. Just be strategic about it from day one and figure out what you need to do to transfer to a top four-year school with your credits intact.

LACK OF ASSETS AS ASSET Not every teenager can write well about what it’s like to have less or what they’ve learned from hard work. Those who can, however, may set themselves apart when writing college admissions essays. We ran a few essays like that in The New York Times last year and are running more in eight days.

I read about Meadow Rue Merrill’s son setting off for his college visits with a tent, a pair of good pants and Easter eggs for snacks and desperately wanted to read the application essay about that trip. I defy any admissions or financial aid counselor not to root intensely for a student like that.

DEBT Your child will probably need to borrow money to pay for college. You may decide to as well, depending on your priorities. But if the student needs to borrow more than the maximum amount that the federal student loan program allows each year, then it’s probably too much. Once students start borrowing from banks in addition to the government, the debt from the private lender isn’t eligible for the federal income-based repayment program. That option can keep people out of financial trouble if they’re having problems affording their federal student loan payments.

With parents, it’s trickier. The federal government will lend you whatever you need to pay for college costs if you pass a basic credit check. Whether you should borrow, however, depends on how many children you have, how much money you’ll need to retire and how long you can keep working, among other things. If you think there’s a chance that you’ll become a financial burden to your adult child later, then taking on a lot of new debt is probably not wise.

This is all intensely emotional. Your offspring are being judged by strangers, you’re not sure how you’re going to pay for it all and the kids are becoming adults. Cry all you want; I know I will. But don’t shed a tear over your savings-account balance. Cry out of pride that you’ve raised children who will know how to take advantage of everything that college has to offer, no matter where they end up.

Ron Lieber is the Your Money columnist for The New York Times. He is the author of the forthcoming “The Opposite of Spoiled,” about parenting, money, values and raising the kinds of children all parents want to push out into the world, no matter how much money they have (Harper Collins, February, 2015). He hosts regular conversations about these topics on his Facebook page and welcomes comments here or privately, via his Web site. The Opposite of Spoiled appears on Motherlode on alternating Thursdays.

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We're all living the family dynamic, as parents, as children, as siblings, uncles and aunts. At Motherlode, lead writer and editor KJ Dell’Antonia invites contributors and commenters to explore how our families affect our lives, and how the news affects our families—and all families. Join us to talk about education, child care, mealtime, sports, technology, the work-family balance and much more